Solvency II

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Solvency II , also abbreviated Solva II , English Solvency II , is a directive of the European Union , with which the European insurance supervision law was fundamentally reformed. The guideline focuses on risk-based solvency regulations for the capital adequacy of insurance companies / groups and qualitative requirements for the risk management of insurance companies / groups as well as expanded publication requirements. The directive was published Europe-wide in 2009 and has been in force since January 2016.

The framework directive 2009/138 / EC came into effect on November 25, 2009 - although the implementation in the EU states dragged on for a long time - and has since been amended and corrected several times. Until the implementation of Solvency II, the previous regulations were to solvency , the later as Solvency I (English Solvency I ) were described. These are based on the European directives 2002/13 / EG for damage insurance and 2002/83 / EG for life insurance . They are based on the First Directive 73/239 / EEC (taking up and pursuing the business of direct insurance).

Legislative process

On July 10, 2007, the European Commission submitted a proposal for a Solvency II Framework Directive to the European Parliament and Council. At the beginning of April 2009, negotiators from the 27 member states and the EU Parliament were able to agree on new Solvency II supervisory and equity rules. Solvency II was passed by the EU Parliament on April 22, 2009 and by the EU finance ministers on November 10, 2009 and has been in effect since November 25, 2009.

The national implementation of the directive took place in Germany through an amendment to the Insurance Supervision Act . A first draft for this was introduced into the legislative process by the federal government in February 2012, but this was delayed due to the outstanding Omnibus II Directive (see below). In September 2014, a new draft was introduced that was passed by the Bundestag on February 5, 2015. The draft law was approved by the Federal Council on March 6, 2015; the law entered into force on January 1, 2016.

Start of Solvency II

In order to adapt to the new EU financial supervisory architecture and the Lisbon Treaty , the EU Commission proposed changes to the Solvency II Directive in January 2011 with the Omnibus II Directive. The negotiations on this between the European Parliament and the Member States in the Council, however, dragged on longer than planned. This created the risk that the Solvency II Directive would have to be implemented nationally by the originally planned date of October 31, 2012 without these changes in the member states. A quick fix guideline in September 2012 postponed the deadline, so that the member states would theoretically have had to adopt the regulations by June 30, 2013 and companies would not have had to apply the new Solvency II rules until January 1, 2014.

In addition, in September 2012 the EU Commission proposed a further postponement of one year. Elke König , then President of BaFin , believed that Solvency II could start in 2017, while Carlos Montalvo ( European Supervisory Authority for Insurance and Company Pensions , EIOPA) emphatically emphasized that EIOPA was working on getting the implementation to 1. January 2016.

Before further technical decisions are made on the content of the Omnibus II Directive, an impact study was carried out specifically on various options for mapping long-term guarantees in Solvency II (“Long Term Guarantee Assessment”). The study was carried out on behalf of the EIOPA trialogue parties in cooperation with the national supervisory authorities and insurance companies; the results were published on June 14, 2013.

Commissioner Barnier announced at the beginning of October 2013 that a guideline had been drafted that would postpone the date of first application to January 1, 2016, which is also known as "Quick fix 2".

On November 14, 2013, the Commission announced that an agreement between Parliament and Council could be reached in the trialogue and that Solvency II could be introduced on January 1, 2016. Parliament approved the Omnibus II directive on March 11, 2014.

Preparatory phase

At the end of September 2013, EIOPA published guidelines for preparing for Solvency II. These will be applied by the member states following a comply-or-explain procedure from January 1, 2014. De facto, some of the provisions of Solvency II are preferred, including requirements for business organization and risk management, forward-looking assessment of the company's own risks (in the sense of a company's own risk and solvency assessment ; ORSA for Own Risk and Solvency Assessment ) as well as aspects of reporting and the pre-application phase for internal models.

Impact studies

To determine the current status of technical provisions and to assess the effects of the requirements planned under Solvency II, the Committee of the European Supervisory Authorities for Insurance and Occupational Pensions (CEIOPS, the English Committee of European Insurance and Occupational Pensions Supervisors ) decided from 2005 to 2010 five Impact studies (QIS abbreviation for Quantitative Impact Study ) carried out. The requirements for the risk management of insurance companies and the calculation specifications for the technical provisions have been made more specific. The applicability of the calculation formulas and the reports to be drawn up for the supervisory authorities and the public were tested. Based on the experiences from the previous impact studies and taking into account current events on the financial markets, the formulas for calculating the solvency capital have been repeatedly adapted. In March 2011, the European Supervisory Authority for Insurance and Occupational Pensions (EIOPA for European Insurance and Occupational Pensions Authority ) published the results of the QIS5.

Independent of the European coordinated impact studies, individual national supervisory authorities or other parties have independently carried out impact studies, for example the German Association of the German Insurance Industry (GDV) with the study also known as “QIS6”.

According to a recent study, all life insurers active in Germany met the solvency requirements in 2018, but twelve companies only with accounting aids granted by BaFin.

Three pillar approach

As with Basel II , a three-pillar approach is followed. The risk profile of an insurance company is naturally different from that of a bank. In the case of an insurance company, the underwriting risk (the core business risk) plays the largest role in the risk assessment ; the credit and market risks, which are important for credit institutions, are downstream for insurance companies. The risk situation of insurance companies and banks is similar, however, when it comes to operational risk . In the Solvency II mindset, the focus is on the protection of the insured and their claims.

  • Pillar I deals with the amount of the minimum capital requirement (abbreviation MCR from English Minimum Capital Requirement ) and the amount of the solvency capital requirement (abbreviation SCR from English Solvency Capital Requirement ) in relation to the eligible own funds (abbreviation EOF from English Eligible Own Funds ). Under Solvency I, own funds were referred to as the available solvency capital (abbreviation ASM from available solvency margin ).
  • Pillar II concerns the risk management system and primarily contains qualitative requirements, for example the qualifications of the board members of insurance companies (so-called “fit-and-proper” criteria).
  • Pillar III regulates the reporting obligations of insurance companies: on the one hand, reporting obligations to supervisory authorities (English supervisory reporting ) and, on the other hand, information to be published (English public disclosure ). The reporting obligations under Pillar III of Solvency II should be closely linked to other statutory reporting obligations such as in accounting, in particular the International Financial Reporting Standards (IFRS).

In addition, the Solvency II Directive includes extensive changes to the supervision of insurance groups. Before 2016, there was supervision at group level in addition to supervision at solo level (so-called "solo plus supervision"). Since January 1, 2016, there has been a cooperative group supervisor in which national supervisors, the group supervisors and EIOPA work together in the supervisory college .

Solvency Capital Requirement (SCR)

The solvency capital requirement (SCR), a target value for equity, is calculated according to Solvency II using the so-called standard formula or an internal model. Companies can have models approved for their specific situation; if you do not do this, you have to use the following standard formula:

The standard formula takes into account both various insurance-type-specific risks and operational risks . For example, the capital requirement for life insurance is calculated with a mortality rate increased by 15 percent. Operational risks are risks that are triggered or favored by faulty internal company processes, a lack of controls, incorrect assessments (e.g. the value of a company that has been bought out), faulty models, fraud or external events (such as epidemics or earthquakes).

The calculation approach of the standard formula represents a clear improvement compared to the previous supervisory regime. First, it is criticized that the calculation of the SCR is based on the assumption of normally distributed individual risks. Second, the mutual dependency of the risks is taken into account via the (linear) correlation coefficient instead of copulas depicting non-linear relationships . Risks that are uncorrelated in the first order, but are dependent, would be neglected in the aggregation . In both cases, the standard formula would systematically underestimate the equity requirement.

outlook

A review has been announced for 2020 that could result in a revision of the Solvency II directive (so-called LTG review ). The European Commission has, the EIOPA asked to examine specific issues in more detail, including interest aspects. During an initial review (so-called SCR review), only the Delegated Regulation to the Solvency II Directive was adapted, but not the Solvency II Directive. It remains to be seen which proposals will be made first by EIOPA and then by the European Commission and to what extent the fundamental principles of the EU supervisory system that has now been in place for three years will be changed in the legal process.

literature

  • Helmut Gründl , Mirko Kraft (ed.): Solvency II - An introduction: Basics of the new insurance supervision. 3. Edition. Karlsruhe 2019, ISBN 978-3-96329-173-9 .
  • Malte Höppner: Capital adequacy and capital allocation of composite insurance companies based on an internal model. Karlsruhe 2011, ISBN 978-3-89952-645-5 .
  • Frank Romeike, M. Müller-Reichart: Risk Management in Insurance Companies: Basics, Methods, Checklists and Implementation. 2nd Edition. Weinheim 2008, ISBN 978-3-527-50324-7 .
  • Philipp von Plato: Consequences of Solvency II for the capital requirements of life insurance products. 2005, ISBN 3-89936-330-2 .
  • Thomas Hartung: Equity regulation in insurance companies: an economic-risk theory analysis of various solvency concepts. Karlsruhe 2007, ISBN 978-3-89952-302-7 .
  • Markus Beringer: The division principle of life insurance: still up-to-date after the implementation of Solvency II? Karlsruhe 2007, ISBN 978-3-89952-334-8 .
  • Verena Nallin: Calculating the minimum capital requirements under Solvency II - choosing the right risk measure . 2007, ISBN 978-3-8366-5742-6 .
  • Daniel G. Meister: Corporate Governance and Compliance Management for Insurance Companies - Against the Background of the Implementation of Solvency II. 2007, ISBN 978-3-8364-3383-9 .
  • Frank Romeike, Matthias Müller-Reichart, Thorsten Hein: The insurance industry at the crossroads - results of the first benchmark study on Solvency II. In: Zeitschrift für Versicherungswesen. October 2006, pp. 316-321. (risknet.de)

Web links

Individual evidence

  1. ↑ Dirk Looschelders, Lothar Michael: Düsseldorf lectures on Insurance Law 2015 . § 5a VVG old version, compliance, PEICL, legal security, equal treatment in the VAG. ISBN 978-3-89952-952-4 , pp. 41–42 ( on Google Books ).
  2. ↑ Commission of the European Communities: Proposal for a directive of the European Parliament and of the Council on the taking up and pursuit of insurance and reinsurance activities. Solvency II . July 10, 2007 ( eur-lex.europa.eu [PDF; 1.7 MB ]).
  3. ↑ ec.europa.eu ( Memento of the original from April 4, 2014 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / ec.europa.eu
  4. ↑ Directive 2009/138 / EC of the European Parliament and of the Council of November 25, 2009 regarding the taking up and pursuit of insurance and reinsurance activities (Solvency II) in the consolidated version of March 31, 2015 , accessed on December 24, 2016 . With history of changes and corrections.
  5. ↑ dipbt.bundestag.de
  6. ↑ dipbt.bundestag.de
  7. ^ Shorthand report, 85th meeting. (PDF) German Bundestag, p. 8028 , accessed on February 6, 2015 .
  8. ↑ bundesrat.de
  9. ↑ Proposal for a directive of the European Parliament and of the Council amending Directives 2003/71 / EC and 2009/138 / EC with regard to the powers of the European Supervisory Authority for Insurance and Occupational Pensions and the European Securities Authority (PDF)
  10. ↑ Directive 2012/23 / EU of the European Parliament and of the Council of 12 September 2012 amending Directive 2009/138 / EC (Solvency II) with regard to the time of its implementation and the time of its application as well as the time of the repeal of certain directives (PDF )
  11. ↑ Solvency II: New rules for insurers will come later. Financial Times Deutschland , September 19, 2012, archived from the original on September 20, 2012 ; Retrieved October 4, 2012 .
  12. ↑ Herbert Fromme: Solvency II: New rules for insurance will not come before 2017. (No longer available online.) Capital.de, January 23, 2013, formerly in the original ; Retrieved January 26, 2013 .  ( Page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.@1@ 2Template: Dead Link / www.capital.de  
  13. ↑ Interview with Carlos Montalvo, Executive Director of EIOPA, conducted by Garry Booth. (PDF; 65 kB) (No longer available online.) Reactions magazine, archived from the original on October 19, 2013 ; accessed on February 18, 2013 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / eiopa.europa.eu
  14. ↑ EIOPA LAUNCHES THE LONG-TERM GUARANTEE ASSESSMENT. (PDF; 196 kB) (No longer available online.) EIOPA, January 28, 2013, formerly in the original ; Retrieved January 29, 2013 (press release).  ( Page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.@1@ 2Template: Dead Link / eiopa.europa.eu  
  15. ↑ EIOPA: Long-term guarantees assessment. ( Memento from April 12, 2014 in the web archive archive.today )
  16. ↑ Statement by Commissioner Michel Barnier on the application date of Solvency II. European Commission, October 2, 2013, accessed on October 4, 2013 (MEMO / 13/841).
  17. ↑ Solvency II, 2016 and "Quick Fix 2" - Let the music play ... October 4, 2013, accessed October 4, 2013 .
  18. ↑ Commissioner Barnier welcomes Trilogue agreement by Council and Parliament on the "Omnibus II" Directive. November 14, 2013, accessed November 15, 2013 .
  19. ↑ Omnibus II vote: A big step towards a safer and more competitive insurance industry. March 28, 2014, accessed March 28, 2014 .
  20. ↑ Preparation for Solvency II: Expectations from BaFin and structuring of the preparatory phase. (No longer available online.) BaFin, archived from the original on February 14, 2014 ; accessed on February 24, 2014 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.bafin.de
  21. ↑ Solvency II: EIOPA publishes guidelines for preparation . In: BaFin (ed.): BaFin-Journal . October 2013, p. 4 ( bafin.de [PDF]).
  22. ↑ eiopa.europa.eu ( Memento of the original from January 19, 2012 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / eiopa.europa.eu
  23. ↑ gdv.de ( Memento of the original dated May 30, 2012 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.gdv.de
  24. ↑ Rafael short, solvency ratios and mandatory reporting German life insurers. In: Policen Direkt. April 24, 2019, accessed on July 19, 2019 (German).
  25. ↑ ec.europa.eu
  26. ↑ A. Sandström: Solvency II: Calibration for Skewness . In: Scandinavian Actuarial Journal . tape 2 , 2007, p. 126-134 .
  27. ↑ Dietmar Pfeifer , Doreen Straßburger: Solvency II: Stability problems with the SCR aggregation formula . In: Scandinavian Actuarial Journal . No. 1, 2008, p. 61-77 ( online [PDF; 189 kB ]). online ( Memento of the original from December 25, 2016 in the Internet Archive ) Info: The archive link has been inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.  @1@ 2Template: Webachiv / IABot / www.staff.uni-oldenburg.de
  28. ↑ Letter from Olivier Guersent, Director General, European Commission. (PDF) Retrieved July 12, 2019 .
  29. ↑ Request to EIOPA for technical advice on the review of the Solvency II Directive. (PDF) Retrieved July 12, 2019 .